Continuously using FHA

[Tayvon Jackson]

I am interested in the buy and hold strategy. Does anyone use the strategy of getting an FHA loan living in it for a year and then moving out and doing it over and over again. Is it a limit on how many times you can use an FHA without them figuring out what you are doing. Is there any strategy that you can use to pick up 2 properties a year as buy and holds since FHA only limits you to 1 a year?

[Richard C.]

Per HUD:

"FHA will not insure a mortgage if FHA concludes that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be encumbered will be the only one owned using FHA mortgage insurance. "

So even one property is too many, if they know/suspect you are trying to use a program designed to encourage owner-occupants for investment purposes.

But, on the other hand:

"If the borrower is relocating and re-establishing residency in another area not within reasonable commuting distance from the current principal residence, the borrower may obtain another mortgage using FHA insured financing and is not required to sell the existing property covered by an FHA insured mortgage."

And:

"The borrower may be permitted to obtain another home with an FHA insured mortgage if the number of legal dependents increases to the point that the present house no longer meets the family's needs"

So if you buy a building with 4 single-bedroom units, and then get married and have a child, you might well be able to get another FHA loan. Or if you move 100 miles away, you may get another.